it's thursday august 13th, 2015 and squawk box begins right now. ♪ >> good morning, everyone. welcome to squawk box here on cnbc. i'm becky quick with andrew ross sorkin and scott. >> joe is on vacation this week. let's get you up to speed on the markets. take a look at the u.s. equity futures. yesterday the dow ended upturning around. 277 point early decline. ended up unchanged by the end of the day. you can see there's moderate advance with the dow futures up by 38 points. s&p futures up by 5.5 and the nasdaq up by close to 20. more on the overseas action and china central bank in a moment. but first as you are just waking up check out these pictures. huge explosion shaking a port city in china killing at least 44 people and injuring hundreds.

those blasts sent massive fire balls into the night's sky. the initial blast erupted at a warehouse for hazardous materials and triggered other explosions at nearby businesses. those explosions could be felt miles away. the cause at this point not immediately clear. let's take a look at some live pictures this morning from tianjin china. you can still see the smoke cloud billowing. we heard from hyundai. we'll take more of a look at what's happening with china in a bit. about 4,000 imported vehicles were destroyed by that blast. >> here's the big stories today, china central bank holding a news conference in beijing overnight arguing there's no basis for continued currency depreciation. earlier in the day they set the rate below yesterday's close. we'll have a live report in a

moment. athens wants to see a vote before a euro zone identifinanc meeting tomorrow. it argued it lacked clarity on the direction of policies. here in the u.s. a busy day on the data front. we get jobless claims, july retail sales and the consumer remaining front and center before the bell. we'll hear from kohl's, nordstrom, king digital and party city. >> let's talk about some stocks to watch including cisco. shares were up on this news. here's what chuck robins told jim cramer on "mad money" last night. >> we think that security is a

tremendous play for us and we'll build out that architecture and innovate and drive our own internal rnd and we'll look at investments and do co-development with customers. >> that stock is up 3.9% this morning. we'll be talking to an analyst in about 15 minutes. >> also shares of the developer getting a boost in late trading. announcing a joint venture to develop a new solar project in utah. diamondback energy falling a bit. launching a public offering of 2 million shares in common stock that stock is up by 2.25%. this move should help expand products for fighting so-called super bugs. plus we should check out shares of news corp. posting better than expected quarterly

earnings. cost cuts that includes dow jones and the wall street journal. the company also announcing it is revealing strategic options for amply identify. that's the digital education brand. that stock is up by 4.8%. >> other media news going on, nbc universal investing $200 million in vox media. it owns tech blog recode and espy nation. it hopes to build a partnership that involves collaborating on editorial content and advertising technology. a yununit of nbc. nbc a unit of comcast. we should also tell you there is speculation around an additional investment in buzz feed that would value that company around $4.5 billion. we'll talk about that in the next hour. but the other big buzz stories, u.s. authorities launching an investigation into the former chairman of dean foods.

tom davis is now suspected of leaking confidential information about a corporate spin off to professional gambler billy walters who is believed to have tipped off phil mickelson. just a week ago he abruptly re-signed as chairman of dean foods last week ahead of the company's earnings. there was no great explanation as to what was going on. this may be that explanation. >> a long wait s. about a year. >> a year ago there were clorox and dean foods if i remember. >> right. >> they were somehow trying to connect. the gambler and phil mickelson. they thought carl icahn tipped off phil mickelson and traded ahead of his investment in clorox which was the original

theory. that piece of it is not. >> i remember icahn saying i heard of phil mickelson but i never met him. like hi barely knew who he was at that point. >> we'll get more details over the next day or two of what really transpired but pretty interesting. >> no doubt. handing that information to the fwofler. >> take a look at where futures are following the huge come back late yesterday and you can see that the dow would open higher by shy of 50 points. the nasdaq could get a bump as would the s&p 500. look at europe where the dax has been a big focus because of china. it's been in direction mode and getting a nice bump today as are all of the european markets across the board. asia, have to take a look there given what's been going on in the markets and the shanghai

composite up. virtually across the board in global markets today. take a hook at oil and wti crude is rebounding up sharply. the dollar today as we take a look at how currencies are shaping up, there's the ten year note yield at 216. that's been on investors radar of late giving the federal reserve expectations and what it could mean when they try to figure out the best time to raise interest rates. so the euro giving some back after a pretty descent size yesterday and gold after being dormant for so many months caught it yesterday. >> now to asia, we want to get to sri from singapore with more on the overnight sessions and

comments from china's central bank. >> hi, andrew. we've seen the relief rally in asian markets today after two days of very heavy losses. quite a sizable risk off move in the markets. hiking fears that china fired off a currency war in this region but the pboc coming out and offering an olive branch and trying to calm the anxiety in the market by saying, look, it's not today but depreciate the country sy by as much as 10% so tried to send the message that we're encouraging more two-way volatility. the longest in the currency. so that's the message from the bpoc and the markets send to be

taking that at face value and taking that this is not the beginning of the depreciation cycle and more in the regional currencies as a result. so relief on the outside and also helping with that late session rally overnight in your neck of the woods. that's helped confidence as well. let's look at the currency and that helped some over here as well. especially those that are most vulnerable to normalization and in terms of trade linkages to china, both vulnerable to further devaluations. they have seen at 17 years lows so they bounced off those very low levels but the narrative still has not changed. they're still looking very vulnerable because of the domestic policy, because of fed

normalization. let's not forget both of these countries are big commodity exporters so the pressure ahead of fed normalization still remains on. that's where we stand. back to you now. >> sri, thank you. back here in the united states stocks staging a come back. down by 277 points for the dow at one point. head scratching reversal and that begs the question what is going on. joining us is steve friedman, senior investment strategist and george parks who is analyst at the spoke investment group. steve what do you think did happen? people thinking this puts off the fed raising rates in september? this was a big reversal and it came shockingly.

>> this is not as big of a deal as anticipated. the exposure attorneyings is 4 to 5%. the move itself was never a big deal and, you know, ultimately you do have a little bit of the factor open to the feds would be a bit of a safety net. but the main point here is this probably matters a bit more for the inflation outlook than the growth outlook because we import a lot more than we export. of course overnight the statements that this is not going to be an on going devaluations also contributes to taking the air out of the story. >> we know when china's economy falters that's going to have an impact around the globe at this point. that's a huge concern. >> china's economy has been

faltering for four years now. >> they have bad demographicis. this is not something the global markets are panicked about. >> although what happened this week panicked people because it worried them that the chinese were panicking. >> that's correct. as we have gotten more information from the pboc and seen them come through and we have come to understand the mechanism there now using a very market oriented one to set the fixing that fear has mitigated and just look at s&p 500 futures reaction to the fixing over the last three days. so the first two days they had these depreciations versus the prior day.

>> you don't think people are panicking? >> i don't think they are and i don't think they should be. >> construction, core part of the economy weaker than ever. confidence plunging, credibility issues for what's taking place in china. why don't you think we should be more concerned about what's happening there? >> we should be aware of what's happening. >> it's much weaker than most people think now. >> it could be, with china you have to keep in mind the scale and magnitude of the economy we're talking about here. chinese retail sales are going 10.5% year over year and the united states is 1.6%. so this idea that the chinese economy is collapsing, something talked a lot about when apple recorded earnings, ludicrous. so, you know, there can be fears about the impact from china. there can be fears about marginal slow down absolutely and we should be worried about the pboc and losing control of the economy and confidence but i

don't think we've seen any evidence so far that that's what is going on. >> what do you think about the market overall? there's a lot more volatility and serious concerns about the market going nowhere in 8 months. >> this is one of these markets where our narrative is throughout the year and it point of laws down to earnings. this is not a market and being the year of the first rate hike you have this volatility. you're going to have enough earnings growth to be able to propel the market higher but we're talking about growth in the single digits rather than what we said over the last six years. >> what are you telling people to do right now? >> right now we're telling them to remain invested in stocks but we have been shifting our focus away from the u.s. which is a

neutral tactical position and focussing more on europe. despite the volatility the earnings outlook will be so strong that it trumps geo political risk and we have also grown more interested -- >> when you say strong, how much marginally stronger than the united states, though? >> we're talking about earnings growth and teaens. >> are you thinking multinationals or smaller players country by country. >> this is a broad statement about the overall index. you can probably pick your pockets in terms of sectors and countries but for u.s. investors a broad exposure to the euro zone is likely to pay off. >> what do you think this is the best play at this point? >> as always and we're in a bull market people should be invested and not selling every headline. we have been climbing a wall of worry since 2009. we're going to keep climbing that wall of worry in our view. the impending hike could be an issue for stocks but every

indication is this will be a very mild hiking cycle when they do eventually get off. >> what would concern you? what sort of red flags? >> i think if we did see inflation start to really take off. that's something no one is talking about and something that we should probably be more aware of and right -- >> do you worry about that? >> not in the u.s. i don't. >> with the devaluations of the yuan. >> that's all a massive inflationary impulse. energy has base effects. imported goods could have an issue as far as dragging down core headline inflation by, i don't know, maybe .4% for a year or something like that. but as far as the core inflation nary in this country we're running out of workers. we're slowing down. the acceleration in blue collar wages that we saw with the

index. there's lots of indications. >> thank you for coming in today. >> coming up, the street's reaction to cisco's first quarter results plus what the tech giant's ceo makes of the trouble in china now. but first a look back at this state in history. ♪

apple now looking apparently to push the ipad into the business world a little bit more. the wall street journal reporting this morning that the company is working with more than 40 different tech companies to make the device a more appealing tool for work. that move comes as apple tries to deal with falling ipad sales. they have their partnership with ibm. it's a little bit more business friendly going down to the point of you have been telling them look you have to grey this word out or you should have this word here or they're going into the apps and they're saying you need to make it this way. if you have a calendar over here, it should integrate with this and nobody is buying it -- i don't want to say nobody is

buying them but the idea of using it as a business tool is gone but they're talking about the ipad pro coming. it's a much bigger screen, that can come closer to a real laptop. what's that going to do to the laptop business? >> i don't know. i want to buy the new mac book 12. the really little thin and beautiful -- but now i'm sort of waiting for the ipad pro or whatever that is. >> i like having a keyboard. >> i know, you don't like the glass. >> i have ipads but i carrie around my laptop constantly. >> cisco reporting after the bell. the company beating on the top and the bottom lines. this is the first report under the leadership of new ceo chuck robins that took over for john chambers. talking about exposure to china with our own jim cramer last night. >> china is only 3% of our business so our exposure is very

limited. however it's the second largest economy in the world. it will become the largest economy in the world. so we have opinion there 20 years. we're committed to china for the long-term. we have spent a lot of time over there recently and we really understand what's going on but right now we have limited exposure. we're very committed long-term. >> let's get a check on where the stock is trading right now. it was higher and still is in the premarket. there's a look up about 3.5%. joining us to break down the results is tim long. managing director and senior reerj analyst. >> good to be here just getting used to a new voice. >> not only were results good following 20 years of john chambers got to be taunting for any new ceo but we have seen a lot of activity from chuck already in the three months since the announcement, a fua quiz situations of underperforming businesses and

acquisition of the security company. a real solid quarter and some management changes flattening out the structure so we think it's been very solid for him so far. >> strong in the u.s. offsetting some weakness elsewhere. >> how much is sis coe for a real economic view. i remember when john chambers said the word lumpy. >> and everybody got concerned about what that meant for the global economy. how about now? >> they've always been good about what's going on. particularly in enterprise spending it's about 75% of their revenues. so it's been a pretty good barometer. we've seen the u.s. has been very strong both on the enterprise and the commercial so the small business side and they called that out about two weeks ago and they have really been good on calling inflection points in tech and we have seen

really consistent quarters. >> what about the idea that software is playing a much bigger role than it ever has. that's good and bad. the bad being that it takes awhile to make that transition and we have seen that show up a little bit in the results. >> this is generally a very challenging thing. i cover a lot of tech hardware companies. when you want to make the revolution to software revenue hits because software might be cheaper so your revenues might go down and your margin profile and consistency is much better. cisco continues to move higher and they've been transitioning for three years or so now seeing that the world wants more software. >> it's a big spend. they're spending a lot of money. areas like software you're getting low single digit growth at this point. is the expectation that growth is going to ramp up as the spending continues and they're able to adopt their software.

>> you could argue they're facing a revenue hit now because what could have been recorded right now gets more deferred over multiple years. it's a single revenue growth company over the next years. there's still operating leverage in the model and with the software we should be expecting better growth margins overtime. >> andrew, you look like -- >> if you were joe i would get killed on. it's a different type of china question. edward snowden question which is to say what do you think of the long-term impact on cisco has been relating to the nsa and everything we are doing here and whether you think that's still trickling in as a problem to the business. >> china say little bit

different for cisco than the other companies in technology because they have a very large competitor so there's two large chinese competitors so in addition to the geopolitical issues going on there's also within china and the tech industry i cover the wireless space as well, there's a big push by the government to use local companies and local components so how much of it was snoeden and how much of it was we want to use our local companies? so i think chuck on that segment said 3% of revenues coming from china. that's probably largely u.s. or multinational companies that are in china. so i think they're hike many of the companies that faced competitions from the domestic chinese companies there's going to be a little bit more of a head wind because it's not just a macro issue. it's a competitive issue as well. >> but you think using snoeden

as an excuse is a good one. >> a little prop for me to say where i sit but i do know that it's a global and there's such a real alternative there. >> we have to go but is there a read through to anybody else? juniper? have they reported yet? >> they had a very good quarter. but i would say for the larger networking companies this is a pretty positive read through. as i said, nice, straight down the middle of the fairway which is what we want to see from them. >> thanks for being in the middle of the fairway. >> when we come back this morning, some video footage may reveal the largest great white shark ever caught on camera. we're going to show you the pictures and tell you if it's safe to go back in the water next. first take a look at yesterday's s&p 500 winners and losers. ♪

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welcome back. we are in chairs taking a look at the stories that caught our attention this morning and guys you know that i have an incredible fear of sharks. it's been a lifelong thing.

i saw jaws way too young. there's new video out of a shark that's apparently 20 feet long. it's perhaps the greatest great white ever caught on video. 20 feet long. >> that's crazy. >> a pregnant female. >> looks like a whale. >> yes. it looks like jaws. this is the shark we were told didn't really exist. it's for real. the shark is known as deep blue. by the way, he's a pregnant female so there's another baby on the way which makes me think of jaws 2. >> is the pregnancy one of the size? >> no, she's at least 50 years old according to the guys that captured this video. >> 5,000 pounds i think. >> 5,000 pounds. >> where did they find it? >> off guatalupe island. he only posted it on facebook on august 10th. it received 1.6 million views.

when i saw deep blue for the first time there was one thing in my mind. what do you think that word was? >> i word i can't use in my mind. >> holy cow. he thought hope because he says that a shark of this size is at least 50 years old and that tells him that conservation efforts are working. >> first of all can you believe that the divers were out of the cage? >> no. >> i mean maybe the shark was so big it couldn't turn that quickly. >> or that he looks like an appetizer. you want something a little bigger than that. >> i just can't believe that. >> i couldn't believe that either but there she is. >> i always wanted to be in the cage. >> not get out of the cage. >> yeah but this is on my bucket list of things to do. not what that guy is doing but

inside of the gates. >> have you been following the tom brady deflategate thing right? >> yeah. >> so brady and roger goodell were in manhattan yesterday for a hearing trying to -- before a judge for the whole settlement situation to deflategate. brady, handsome guy, right? >> he is. >> dashing guy, well, not according to the sketch artist who was in the courtroom today. i don't know if you've seen these pictures but the one on some of the newspaper covers today are funny. deflateful dead is what the daily news says today. they say crypt keeper tom brady. the one on -- that actually looks -- >> that's better than the other one. >> relatively doable. >> but i saw this all over twitter yesterday. memes broke out with some of these because he did look like almost the guy from the screen. show them this picture. this is way worse. >> can you get that one? >> on the merits though, the

judge seemed to not be happy with the nfl and roger goodell. >> seemed to think this was a farce of a case. >> seemed to ask them that. he seems to want to settle. from everything that i'm reading it doesn't seem like the judge wants to rule on this. maybe he's trying to pressure them. >> in all honesty point of their point has been they didn't have the evidence and they didn't think he was a credible witness. i don't know if that holds in the court of law though. >> the problem with this whole thing is this particular hearing the judge is only deciding anything based on the process itself. not only the actual evidence. >> actual evidence. >> and, you know, if brady is going to miss four games, and they're going to have a settlement and we give you a one game but you have to admit your guilt, well, brady stood up in front of the world and said i have done nothing wrong. i wouldn't expect he'll take any deal like that when he has to stand up and admit guilt and some former players, i think

mike, invited tom brady to not settle or admit any guilt either. i don't know how it's going to play out. >> take a look very quickly. i want to update everybody on the story from yesterday with geno smith getting his jaw broken. >> that's a great story. >> now they're looking at rex ryan -- he immediately picked up the guy that broke his jaw. picking up the guy that will be able to rattle geno smith any time he does come back on the field. >> it's a total rex move. >> i got a business story but i'm not sure if we should go to come h-- commercial. watch out. verizon getting rid of the two year contract. this is a huge shift in the way they sell phones. it will look a little bit more expensive in certain cases depending on who you are. >> to buy the phone. >> to buy the phone out right

and it will look a little cheaper depending on where you stand too and whether you're going to hold on to the phone. what i can't figure out from this is whether this means you're more likely to keep your phone for an extra year or not? it will offer vouchers. they'll still offer a $200 voucher but a little bit different. >> the beginning of what could be a change in the way that these companies do their business? >> right. >> with apple and others? >> so could have a huge impact on the telephone companies depending on how we react as customers because right now we're on a two year upgrade cycle and that's almost built in subscription business for an apple but if you can move your phone from one network to the other changes the dynamic. >> i can't not break the thing in that time frame. >> the one design flaw of all of these phones, if you drop them

basically once they break. >> that's not a design flaw if you're one of the phone companies trying to sell you a phone. >> that's true. but we say nice things about apple phones all the time and that's -- it looks beautiful but come on, right? should make it out of rubber. >> when we come back this morning is van guard making it too easy for cyber criminals to access your account. the scary warning after this. you're watching squawk box on cnbc. first in business worldwide. ♪ can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

welcome back, everyone, a new investigative piece on the

street.com exposes potential flaws in vanguard's global account cyber security. it serves 20 million customers worldwide and has about 3 trillion assets under global management. joining us is the writer of the article. founding fellow of the street foundation. it's the nonprofit organization trying to expand among consumers through journalism. we're joined by the author of the piece. >> thank you for having me. >> how did you focus on vanguard? you got in touch with a whistleblower? >> a woman called me in the spring and said i work at vanguard. i filed a whistleblower complaint and i have problems with their customer account security and i said tell me about it. it took a couple of months to get the whole thing down but there are some problems there. i wouldn't say pull your money out of the firm but there's

problems there. >> it sounded like most of the problems were things where they were let too many people through and letting too many errors. if you type your password in, if you type it wrong it's forgiving and allows you in anyway. >> you know these personal security questions, what street did you grow up, what's the name of your cat? so you can, instead of fido for your dog you can write in fidal. so they worked in this -- they allow you two typo. >> forgiveness sort of. >> yeah. and online what the cyber security people tell me is that's a real problem. if you've got somebody using a computer program to try to hack your password it makes it much easier if you have that kind of flexibility. >> now the reason they would allow these is so when you can't get in you're frustrated and have bad fingers typing that you don't go call them on their 1-800 line. >> right.

they're not the only firm that does things like that to try to make sure that they don't have people calling the call centers every five minutes. there's a real rub between security and convenience and i think that all the financial firms deal with that. >> what was van guard's response to you when you pointed these things out to them? >> it's interesting. they gave me a lot of time. we spent a lot of time going back and forth but the whistleblower brought up three important problems that she had seen. they only slightly touched on one of the problems. first he said he didn't want to talk about it and then he said to me that's the line between convenience and inconvenience. >> what were the other two? >> this whistleblower got a call one day from a customer absolutely furious because he had just signed up for their voice verification system so you can get on the phone and just

say something like at vanguard my voice is my password. he had his son call in and pretend to be hill and his son got right into the account. that's pretty bad. the other thing that she told me was that she had gone to a seminar last fall, vanguard was getting ready to roll out this personal advisor services, this money management kind of thing. so she goes to this seminar, maybe it's the third or fourth time they have done one of these and she opens the book, this book and she starts seeing all of this personal information. people's phone numbers, people's addresses and you can see, every one of these post it notes is where i found something that shouldn't have been in there. >> someone's personal information. >> we should read a statement from vanguard. here's what they told us. vanguard disputes the fundamental assertions made in the article. vanguard has one of the strongest client protection programs in the investment

management industry. we follow industry best practices applying state of the art technology and rigorous standards and we continually roll out additional options and we educate our clienlts ts best practices. did they change anything you pointed out to them? >> no. they didn't change it because have gone in a dozen or more times myself to see if it works. >> it concern mess as a vanguard client as well. >> where ever you have your money you should check that because schabb has the same problem which they say they're going to fix by the end of the year. >> the biggest question to me about all of this is let's say some money gets moved by a terrible hacker. are they going to end up being responsible or not? >> that's a good question. they have an online fraud policy and the policy says we give you

your money back in unauthorized activity takes place as long as you do the following things which include like don't use the same password anywhere else. i don't know about you guys -- >> i have a unique password for everything. >> well, you're ahead of me. they say your password should be at least 8 characters. which is interesting because they let you use only 6 characters. you have to change your password regularly. don't share your password with anyone and don't click on any suspicious e-mails. so if you do any of those things the policy doesn't kick in. >> it doesn't sound like vanguard is saying that there might not be some problems but by disagreeing or disputing what they say are are the fundamental assertions made by you, are you suggesting that they knew about these issues and did nothing about it as a result. >> oh, they absolutely knew about these issues.

the whistleblower wrote to management including the ceo, i think it was in april of 2014 outlining these security issues and a number of other issues too but these were included in that. she has also -- she has talked to people on record lines telling them about the problem. she has gone to her manager and talked about the problem. they have known about all of these. >> what happened to the whistleblower? >> she still works there and she is on a leave right now. >> but just to put a fine point on it, the damage that's been done has been done -- have consumers lost money? >> well, i don't know and they wouldn't say and i can understand them not wanting to say that. they had a series of fishing attacks last fall as did a number of companies in fall of 2013. i said did people lose money. he said nobody lost money and i said well did people lose money

and you reimbursed them? and they wouldn't go there. >> i'm thinking there's a calculus made. this is the convenience of letting people in and not. 5% or 10%, stuff may get stolen. >> shrinkage. >> that's fine and part of the business model. we'll accept it for what it is. >> this book is not shrinkage. they were sloppy. the security guys i spoke to told me it's a really bad policy to let you put typos into that. >> raises questions about the industry overall. >> yes it does. >> thank you. coming up when we come back, this is not your grandfather's watch. we'll talk to a company that will bling out your time piece for a mere $10,000 so or. they join us right after the break.

welcome back to "squawk box" this morning. what would make an apple watch more than ten times worth its retail price? hand-made, a whole new technology to the technology luxury watch industry and re-creates them to look decades or even centuries old with individual engravings. the founder and chief designer. good morning. you have these watches. you have a rolex here. you have an apple watch and you carve literally right on the

bands. >> correct. >> and this apple watch, for example, we said ten times -- how much would you sell that watch for? >> this watch is $10,000 now that it's finished. >> how much was it before? >> the watch was around $1,000 when you first get them. >> let's see if we get a close-up look. >> you can see the detailed work. and each are carved by hand? >> it's the filigree of controlling like on guns and knifes. >> and so how many of these watches are you selling in a given year? >> well, i use a handful of the finest engravers around the world. it's a limited resource so there's not -- there's a limit which also makes it somewhat beautiful. there's only so many you can do because there's only so much manpower. we carve between 20 and 30 watches a month. >> this watch goes for $10,000? >> it does. >> i apologize if i'm wrong.

i get this on a rolex watch, for example, because that watch, to me, will never really be outdated unless we only wear digital watches in the now tofu. this watch tim cook will come out with a new one. unlike a vintage watch, you will want a new one. what do you do about that? >> you see it in the wearable fashion with tech. apple obviously came out with the gold watch and so forth. it's one of those things people buy luxury pieces or luxury things at times for -- not to put it in the weak sense but because they can. i've been a fan of apple since the products first came out. >> who is your customer? >> i think it's amazing to carve and bring the artistry back to what apple is known for. >> who is your customer? are they in california? are these silicon valley guys? >> this watch is on its way to

dubai after the show. >> don't drop it. >> i have a large buyer in dubai. >> what happens if they screw up? because you have to buy these watches -- >> correct. >> you have to buy them retail. >> apple is the hardest one because we can't disassemble. the rest we take all the guts out so we're purely working on the band and the body of it. if you screw up on those, in general you can buy another one and fix it. it's not something you want to be screwing up but it gives you more wiggle room. the apple watch if you screw it up, yeah. >> the band is interchangeable. if a new watch comes out, you can at least put the band on the watch. >> the bands you can interchange out on all the watches. that's an aspect that makes it nice. >> thanks for coming in. a cool idea. this morning's top stories including latest investments.

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breaking overnight, china trying to ease fears about currency wars, dismissing reports powerful government officials wanted the yuan to go lower. volatility in china could disrupt deal making back here in the u.s. according to gary parr. he'll join us on "the squawk" set. >> the tippnder ceo ousted earlr this year is back. why the dating app is putting its co-founder back at the helm months after replacing him. the second hour of "squawk box" begins right now. ♪ breaking up is hard to do

live from the beating heart of business, new york city, this is "squawk box." this is cnbc first in business worldwide. joe is off this week. our top story this morning continues to be china. the country's central bank taking steps to calm fears on the yuan calling reports of a possible 10% drop in the currency groundless. earlier in the day the pboc set the yuan's midpoint rate lower than yesterday's close, the third straight day of devaluation. the stocks in china trading higher overnight. take a look. the happening seng up -- the hang seng was up 0.4%. take a look at how this is playing out in the united states. after two days, two mornings of very rough openings, you can see this morning there are positive signs. dow futures are up by about 63 points. s&p futures up by eight.

the nasdaq is up 25. this comes after the market pulled off a stunning rebound yesterday. at one point the dow was down by about 277 points, ended the day flat. >> let's tell you about the other top stories going on now. a busy day for economic data. congress expecting first-time filings to remain steady, about 270,000. retail sales and import prices also coming this morning at 8:30 a.m. eastern time. and then we have ray dalio's bridgewater associates reporting its latest investment moves. the world's largest hedge fund disclosing new stakes in fossil group, foot locker, and level three communications and parent company of this network, comcast. bridgewater increased stakes in coca-cola, monsanto, exxon mobil and in potash, agrium, nvidia and southwest airlines. it was in the filing required by the fcc.

sean rad is returning to tinder. he was replaced by chris payne. in a statement payne said we mutually determined this wasn't going to be optimal. thought that a quick transition served everybody best. sean rad served as president and was in charge of product and marketing at tinder. >> is he the guy -- >> a scandal of sorts. >> he got into it? >> there were some things that happened, yeah. can't talk about it. we can talk about them but we won't go into the detail because it's a family program. it's a family program. >> all right. we should tell you more, there is a developing story out of china. a huge explosion shaking a port city killing at least 44 people. injuring hundreds. the blast sent massive fireballs into the night sky. the initial blast erupted at a warehouse and triggered other explosions at nearby businesses.

the cause is not immediately clear. this morning, though, hyundai officials say about 4,000 imported vehicles were destroyed by the blast. getting back to the markets this hour. our next guest says that though the market is showing resilience, damage has been done. dan greenhouse, chief strategist at btig, a cnbc contributor. good to see you, man. >> good to see you, sir. >> what was up with the comeback yesterday? that was out of the blue. >> it was. it started at 12:00. normally these things happen around 11:30 you can say it had to do with the european close as art cashin says. we're talking about a stunning reversal and it was to the degree it came out of nowhere but you had an even greater reversal on july 7 from the down side to the upside. i looked back at the data in late june for the s&p you had a reversal in the opposite direction, a bigger decline top to bottom. i think the larger story this is just sort of part and parcel of

the trading range in which we found ourselves for what is ultimately going to be a record period of time, and i don't think necessarily anything really changed it. >> are you going back even longer than the last eight months? >> the way i do it is since february. the spread between the market's high and low, you can go back to the s&p, i believe, 1944 or for the dow you can go back about 100 years to find a similar thin period of time. >> maybe apple getting some stability yesterday helped the overall market. >> sure. >> and maybe -- and we're just learning of, you know, ray dalio, for example, taking a position in fossil, which is just one of the stocks of more than half of the s&p 500 that is in correction mode down at least 10% and if many cases much more than that. and maybe some people just look at the long and distinguished list of companies and said enough is enough. down 73% from its most recent interday high.

fossil down 74%. dupont, caterpillar, ralph lauren, mattel, discovery, whole foods -- big companies. maybe they just said enough is enough. >> sometimes that's all it takes for a market reversal. listen, i don't know why the market does what it does on an interday basis. >> let's ask this. if you're talking about the tightest trading range you've seen in decades and decades and decades, are you guessing it breaks out to the upside or it breaks lower? >> the answer a lot of people would tell you will break out to the upside. listen, the market almost always goes up. but we've had a pretty consistent theme all year and that was that the fed was going to raise rates in september which is what we thought more or less all year. >> and you still do? >> yes. they still are going to tighten in september. listen, i like to say we invented the one and done camp. i think if anything what's happened with china, which is not as big a deal as some people have said but also not as little a deal as the network will be

littered with people are saying today, this reinforces the idea if they tighten in september they're not going to do it again in december. >> do you think the market can really handle it? >> there's two answers to that question. the more complicated answer is, of course the market can handle it. it's only 25 basis points. to the extent they sort of reduce your expectations for how much they're going to tighten thereafter, then the effects are going to be somewhat limited. if you're arguing that the market, the economy can't handle a 25-point basis hike, you're essentially arguing that this is a very, very bad economy to a degree that most people don't think, that even 25 basis points is enough to tip us over. the shorter, more direct answer is for some reason the s&p 500 declines almost every time that the fed begins a tightening cycle and you can go back quite a long period of time and the data supports that. so if you're asking me, and this gets back to our year, is the stock market going to rally in the wake of the first hike in september? our answer all year has been no.

>> i still hear people suggesting that there's going to be a catch-up trade in the u.s. market relative to what's taken place elsewhere in the world. europe has outperformed, even though the dax has been in correction lately. >> i don't want to catch on to what the dax has done. >> down 6%. there's been to be a u.s. catch-up trade. does the fed move in september coupled with concerns about china make that impossible? >> no, i don't think it makes it impossible. i think it makes it much more difficult. i will say that a lot of the outperformance that you've seen occurred very much in the first quarter and we had a number of clients i consider very smart arguing around april that perhaps the idea europe would outperform in perpetuity would be challenged that it was so strong. it would be very hard for that to continue, and they are arguing for a rotation into u.s. equities thereafter. but, listen, i can't tell you how many clients with whom we meet say it's only 25 basis

points. who cares? that is generally speaking the argument of my clients. the data shows otherwise. >> dan greenhaus, good to see you. coming up when we return, nbc universal taking a stake in so-called new media with a $200 million investment in vox media. the chairman and ceo of vox joining us next. then conventional wisdom says car collectors will swarm cuba. travel restrictions are eased by that may not exactly be true. a live report plus lazard vice chairman gary parr is here and the pace as a result of all of that in deal making. stick around. we have that and a lot more in just a moment.

welcome back to "squawk box," everyone. we've been watching the futures. after that rough market session yesterday where the dow was down as much as 277 points before rebounding and ending the session flat, you can see some green arrows this morning. dow futures are up 66 points above fair value. s&p futures are indicated up 8 1/2 points and the nasdaq up 26. check out retailer kohl's, missing on both the bottom and the top lines in its latest earnings report. the retailer earned $1.07 a share, 9 cents below

expectations. revenue fell short as well. the company cited a bigger than expected negative impact from a number of states declaring tax free sale days july into august and this is what we heard from macy's, too, negative news. kohl's is down 5.7%. nbc universal investing $200 million in vox media. vox runs sites like the veshlg and sp nation to name a few. hoping to build a partnership in editorial content, advertising and technology. nbc universal and cnbc, of course, both owned by comcast. joining us from washington, chairman and ceo james bankoff. maybe i should say welcome to the family, james. >> good morning. we're excited to partner together. >> so tell us a little bit about how this came together and what it really means in terms of how vox is going to now line up and be involved or not with nbc universal. >> well, we couldn't be more excited to announce this

strategic partnership. there's a bunch of partnership elements, too, ranging from creating great programming together particularly video programming to doing some cross promotional efforts to building some have you for brand marketers, brand advertisers across our two great platforms and then also leveraging vox media technology which is a platform that helps us build great media brands like we have over the past few years. so we're excited. we think there's a great fit. >> can you tell us a little bit about the valuations of digital media companies in this space right now? your company is worth about a billion dollars. you put it together starting in 2008. if you really look, your valuation has doubled the last two years if not more than that. it's a great universe to be a part of, james. the question i'm trying to get at, though, do the valuations, to you, make sense, and maybe it's hard for you to say no but

maybe there's a different answer. >> i'm sure there's a lot. creating a great business, creating great properties for our audiences and value for our advertisers. the market does what the market does. i would say it probably does that because there's clearly some shifts going on. technology is driving all industries to disruption and new things and we're benefiting from that. we're creating -- we're on a mission to create some of the great new media brands for a new generation of consumers. we have over 170 million unique visitors every month to our sites around the world growing some great brands and really taking off. i think it's partially reflective of that and we just keep our heads down and do our work. >> though we're partners, "a," are you profitable? >> yes. >> you are profitable? >> yes. >> can you say how profitable? >> no, we're not disclosing that. we'll see. we're not done with the year

yet. we've steadily grown and actually our growth has been accelerating over the past few years. >> this $200 million investment, what are you doing with it? is anybody cashing out, taking any money off the table? >> we're figuring that out. there's going to be a small secondary component. we haven't figured out the details on that. the rest of the money will be used to make sure we can grow the kind of company that we want, that we can invest in our future. we're focused on four areas of growth first, building our brands. we, as i said, want to be the leading media company going into this next generation, and that requires -- in a changing environment we want to make sure we have the capital to act opportunistically, so grow our brands, grow our advertising capabilities, grow our technology platform, and then invest in our infrastructure and our people. and generally that's what we're going to do. that's what we have been doing and we'll continue down that trajectory as a strong, independent company. >> james, you talked a lot about creating new media brands, but

obviously part of this partner ship is developing the existing brands that we have here at nbc universal. i've read some places that you'll be kind of showing up at some of the nbc universal properties including cnbc and i wonder what do we do in those scenarios if i see you around the building? what will you be working on? >> i don't know, high-five? we collaborate in a few different areas. already frequent contributors to cnbc and that will be one element. i think we'll be working on a various cross promotional element. there are many things but one of the things is our brands line up really well together. we're trying to build these brands. in sports we have sb nation and nbc universal has nbc sports. we have recode and cnbc, we have vox.com and msnbc and nbc news. we can go on with racked and

curbed which fit well with bravo and other things you're doing. we see plenty of opportunity for clollaboration, developing new franchise together, cross promoting one another's programming, whether there's delivering cross platform to the brand marketers that we both work with. we're going to pursue all those things and stay tuned as you all say in the tv world to see some great collaboration. >> what percentage of vox does nbc universal now own? >> i don't even know off the top of my head. we already have a previous relationship with comcast ventures. >> collectively do they own a third of the company. >> it's a minority.

we're still closing and seems to be in control of our own dest y destiny. >> should you just own it outright? >> it's an independent company and we want to continue to build it. this is going to be a great investment, a great partnership. >> jim, it's scott wapner. you talk about the changing environment and it's undeniable where new media is going. a week ago the destruction in traditional media stocks. if the concerns are overdone, the death of traditional media is greatly exaggerated or not. >> i think it's

mischaracterized. the fact that we all carry around supercomputers in our pocket, the fact that we're viewing on demand, it's changing. for me that means there's more opportunity being created not less. different methods, different programming approaches, but it creates massive opportunity. i mean, just think about we all have monitors in our pockets so the amount of time that we're going to be viewing is going to be going up. now who takes advantage of those opportunities? who can move with the creative talent to move and appeal to the new consumption habits will create new opportunities i think for companies like ours but i also think for the incumbents as well. this is in part about that, taking advantage, learning from one another and creating some great products for audiences. >> given your valuation, you look at my friends at the "new york times," valuation at $2

billion. do you look at that and say you're overvalued? or do you say maybe they're undervalued, or do you say somebody like that is overvalued? >> they were valued on our potential partially and on the industry's potential. my job is not the same as yours. i don't sit around and compare valuations like that but i focus on building value for our company and our audiences and marketing partners. we're proud to continue growing and building a great company and our results are reflecting that. >> we have to go and i'm going to get killed for asking but there's been a lot of conversation that he wants to turn the company more like vox. what do you think of gawker? >> i have tremendous respect for nick. he's been one of my inspirations in this industry and built up --

>> would you ever buy him? >> i don't think we're going to buy gawker but i'm a supporter of nick's. i know he's doing what he needs to build his company. >> we'll leave it there. again, welcome to the family, thanks. >> thank you. we're looking forward to it. >> you bet. >> take care. lazard vice chairman gary parr talks deal making. then, is there a bubble in subscription box services? the co-founders of services that send you cosmetics or pet toys coming up. time now for today's aflac trivia question. what two families have had three members on sports ill frustrated covers? the answer when cnbc "squawk box" continues. ah! aflac? aflac! i thought you said this guy was the best?

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now the answer -- what two families have had three members on "sports illustrated" covers? the answer the mannings and the ripkens. throughout cuba there are thousands of vintage american cars that make up a large portion of the transportation

fleet on the island nation. now with u.s. and cuban relations beginning to thaw, could cuba be a car buyer's paradise? not so fast. michelle caruso cabrera tells us why many collectors are starting to pump on the brakes. >> reporter: it seems counter intuitive, doesn't it? you see all this video of incredible old cars in cuba, the result of the embargo by the united states. a lot of people assume that once it's legal to do so antique carmakers will descend on the country to scoop them up. we spoke with a lot of experts before we came here and they told us they don't think that will be true for two reasons. one, the value that an antique car demands to the degree that the original parts are still in the car. and we can tell you that here there's almost no original parts in these cars. the exterior may be a cadillac. the interior could be a pugot. the sweet spot in the antique

car market is '65 to '73. the majority are from the '50s and a few from the '40s. cuban exiles could have a lot of interest in having cuban cars because of what they represent, incredible ingenuity and everybody we spoke with had an unbelievable amount of respect for the people here who have been able to keep these things on the road for so long. bottom line, a car in perfect shape you can get in the united states easily for $50,000, here with all the bondo would only go for $5,000 that would be a lot. they would probably sell them even for the lower values. >> and they have not been sitting in grandma's garage for sunday drives. these are things we've been using every single day along the way. >> reporter: yeah, absolutely. and because the cars from the '50s and '40s as well are so big, they command a higher price because you can fit more people

in them. they call them a name because of their most shape and you can fit most people in. >> we'll see you at the top of the hour again, too. >> okay. when we return today, you've heard the adage, don't fight the fed. lazard's gary parr says don't fight the chinese government. he joins us now on how volatile markets could slow down deal making in the united states.

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♪ some day somebody's going to make you want to turn around and say good-bye ♪ ♪ until then baby are you going to let them hold you down and make you cry ♪ live from the most powerful city in the world, new york. this is "squawk box." >> welcome to "squawk box" first in business worldwide. u.s. authorities reportedly launching an investigation now into the former chairman of dean foods. "the wall street journal" reporting tom davis is suspected of leaking confidential information about a corporate spinoff to professional gamblers -- to billy walter. pro golfer phil mickelson is who

you're looking at now. head of the company's earnings release monday. we didn't understand what was going on. we have a little bit better idea. the next question becomes what happens to the gambler and what happens to phil mickelson in all of this. should they go down the line and where do the responsibilities lie? former president jimmy carter says he has cancer. he had a mass removed from his liver earlier this month. in a statement released yesterday carter said that surgery revealed cancer had spread to other parts of his body. of course we wish him well. checking the markets, u.s. equity futures this hour -- we'll flip that board around. looks like it would open up higher. the s&p 500 looking to open about eight point higher. china sending some shock waves throughout the global markets with its latest currency moves. you wonder what impact on the deal space. joining us now on set to talk about this and more is gary parr, the vice chairman of laza lazard, the leading restructuring firm.

thanks so much for being here. >> nice to be here again. good morning. >> i know you spend time in china. how are you reading what's been going on? people are saying this is massive currency manipulation, others saying maybe not as much of a big deal. what do you think? >> well, a few observations. clearly the government is involved in managing the markets and trying to affect the markets but that's not so unusual. the ecb is flooding the market to lower interest rates in europe. the u.s. fed has been managing interest rates here since the financial crisis. it happens all over the world, and we've done it in the u.s. for a long time. we don't do as much direct intervention in the stock market, but it happens and it's common. the chinese markets are still new. for the government to figure out how to intervene, where to intervene is a process. >> you think they're more ham handed about what we're doing? >> it's not too dissimilar to what we've done if you look

back. >> stepping and sarajevoing, okay, we are going to support the yuan, peg it here, allow it to come off here and play the other side of it. >> there were times we did that with the u.s. dollar, many times in the last 100 years. there have been multiple times we managed the dollar. >> in the last 100 years. >> fair enough. you say we don't do that anymore. >> you're right. >> now we're managing interest rates. >> in terms of managing interest rates i see that completely. it does give investors huge issues on two counts. watching what they did with the stock markets, what they're doing with the yuan. it's more ham handed, less -- >> they're still learning. >> still learning and figuring out how to do this. it raises concerns because we think they're doing this because they are panicking based on a serious slowdown they see in the country. >> certainly concerns. panic may be too ebbs trem but certainly they are concerned about that. it is one of the core initiatives of the government to make sure there's stability in the economy, stability in the banking system and providing

liquidity. for that matter liquidity in the real estate market. >> you said no panic, though. how bad is it? we had an analyst on before who said we shouldn't worry about china at all. what level -- >> different way of observing -- first of all, for any westerner to say they really understand, i wouldn't believe them. it's hard to know what's behind the curtain. i think they're concerned in trying to get it right with a long-term view. i have sat in meetings with a number of the people that are involved in the people's bank of china and other regulatory authorities and the perspective they take is a long-term view. then they're trying to make the adjustments on a day-by-day basis. the way i see it, it is a long-term fundamental concern they want to maintain growth and shift to consumption. >> you know banks very, very well. hank paulson has come on this program, has written extensively

about what he thinks about china. do you see a real crisis pending coming? >> i don't. i'm going to say why. tr there are, again, risks. there are a number of risks embedded. here and even back to the intervention question, we've had a saying here in the u.s. for a long time, don't fight the fed. i say the same, don't fight the chinese government. they have a lot of firepower. and so how it will play through i can't be sure, but when there's risk whether in banks or other places, the government has a lot of firepower to step in and provide stability. it may not work aright away and may have volatility. the fed intermeans in ovenes in market. >> that's a fair point. the massive pace we've seen.

>> that's about where we were in 2007. >> so what does that tell you? are you concerned it's at the same level we saw in 2007? >> the m&a activity is a lagging indicator. it is sceo confidence and board confidence which takes time and so it's been five years since the depth of the financial crisis, even six years, and finally we're at a place where boards and managements are comfortable again, confident again about taking the risks of mergers. the stock market is still rewarding mergers by and large even for the buyers. of course we'll get to some place there may be heated activity. but if you look at the percentage, the dollar volume relative to the stock market, we're just now approaching sort of the historic mean. we're not in a bubble place if you look at that as just a percentage of activity. there are risks that could slow things down. it is interesting whether china moves their currency one way or

another or they raise 25 or even 50 basis points we don't think will slow down m&a activity. the consequences of those may slow down m&a activity, meaning the stock market goes bad, or something like oil price really plummets, things like that. >> how will you know when m&a activity is about to turn or can't you know, it just stops? >> when would you know when the stock market is at the peak? the one aspect of merger activity is companies should be taking a longer term view so it's not like a stock trade. so every day the stock trade is i could sell it again tomorrow but a merger is supposed to be something that lasts a long time. hopefully boards take the more deliberate measured and longer view, but there comes a time when there will be a peak. >> the bell is not ringing yet,

in other words? >> you've been involved in consolidation with banks over the years, virtually every bank on wall street has been a client of yours or you've been on one side or the other of banking consolidation and you talk about the transformation of wall street and how it might transform. we talked about the big banks either splitting up or changing themselves because of regulation, a new debate again about the presidential candidates. what is your sense of where we are in terms of that consolidation or breakup? >> yeah. and you might recall i've talked about concentration not consolidation. usually industries that are fragmented and have over excess capacity to eliminate the excess. in investment banks you have people leaving the business. they shut it down. there's nothing to sell. so a number of firms have continued to be shutting down their investment banking activities or reducing trading or exposure. you end up with this concentration going to goldman

sachs, jpmorgan, a lot are leaving the business. it's like a darwinian exercise. it's been slow. a lot of banks have not responded as quickly as i would have thought they would. what's interesting in the last six months four banks at the board level decided they're not changing fast enough so they've changed the ceos. and that's very telling. >> so you look for where is the change, instead of day by day, they're making business changes. the boards have said, in part because of shareholder pressure, change the ceos. you have to change your strategy. >> and, therefore, you think something comes from those changes? >> reduction. it's more the concentration. more big banks will reduce their exposure to investment banking. >> because it's a bad business? >> it's so capital intensive. if you start working your way through, it takes so much capital to be in parts of fixed income, parts of commodities that your return equity you can't get to 10%. you start exiting. and the regulatory risk.

>> another m&a question. we've seen it so dramatically pick up lately in health care and those sorts of areas. what about energy? are we going to see deals given what's happened? >> energy is likely -- the largest deal is an energy deal. it's in europe but it's royal dutch shell so there is big. >> there's so much stress in various parts of the business. >> what we're going to see over the next 6-12 months is more restructuring activity. the second tier companies, a lot of over levered companies that are under pressure and so at least for 6-12 months restructuring is what we expect to see. >> gary, a broader question on m&a. a lot of people have come on and said since the financial crisis ceos have been afraid to invest and build things. it's easier to buy something and

that's why we've seen such a frenetic pace. do you think it's a fair charge? >> it's interesting, becky. the first phase was companies wa bought in their own stock. we sat at least four companies with a lot of companies saying i'm afraid to even go buy another company. that's too risky. i'll buy my own stock or sit on the cash. it could be we're going through a phase. now it's not as risky to buy a company and maybe get in a phase where companies invest in their businesses more. >> it's been a huge frustration i think for the fed and the federal government with all of this money out there they thought that companies would be investing in people, investing in factories, doing things to put people back to work and it hasn't necessarily worked. >> it hasn't been a big translation, you're right. what we see are companies saying in their core businesses are not growing very fast and a lot of industries -- to invest in the business you won't make the revenue go up. the best way to get earnings

growth is to buy someone else, get the consolidation benefits and that will drive earnings. it may not drive revenue. a lot of people are saying what we want is economic growth which will get revenue growth. >> does the change of political environment have anything to do with your business? you're going to get a new president. there are regulatory issues that are considered on an everyday basis. >> justice department and how it behaves, other segments of regulatory. >> you think about it now? >> starting to figure -- start to go strategize around that stuff? >> i don't think so as to will it get easier or harder. there's more real time like health care. >> are there certain sectors where people see a window closing and they think i have to get through that window now, or things that we're waiting on thinking, okay, in the next term we have a shot at getting this deal across the finish line we didn't before? >> i'm not aware of people

managing because the next election is too far away is one reason to know which way the shift could go. it's a more difficult environment today than it was ten years ago. in the regulatory arena. it is fundamentally important. people know the delta. >> thank you for coming in today. >> nice to see you. a pleasure. >> an easy walk back to the offi office. >> right over there. welcome to the neighborhood. >> i know you've been here before. come on back. coming up when we return, stock movers ahead of the opening bell including one internet company getting a boost from an upgrade. we have details on that next. and then later, g op presidential candidate lindsey graham will talk about the crowded field and the iran nuclear deal.

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and shares of tesla this morning are ones to watch. $500 million equity follow on is set to price after the market closed today. tesla offering 2.1 million shares and elan musk plans to buy up the $20 million worth. the electric carmaker is trying to raise more cash. when we come back this morning, is there a box bubble brewing? from cosmetics and fashionable outfits to do it yourself meals, shaving kits, even treats for your pets. the subscription box services are everywhere. we'll talk about what it means, what you can get, what the future holds. up next, the co-founder of bark box about the long-term prospects for the subscription economy. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere.

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the latest consumer craze giving retailers a run for their customers from beauty to clothing to food, shoppers looking for the doorstep convenience of the box a month subscription trend. i don't know who here is part of that trend. we will talk about it. the money has followed. pouring billions the past few years with scores of companies popping up. the question, is there a boom or a bubble brewing in the box industry? here with us on set to discuss are two of the biggest players in the space, the ceo of a

subscription cosmetic company and bark box that send treats and toys to your pet. your wife is a subscriber -- a happy subscriber? >> birch box. >> must be happy because they keep showing up. >> if you sit in they give you a birch box. i have a men's birch box with good stuff in it, by the way. >> thank you. i'm so glad to hear you enjoy that. >> it seems there's a box for everybody. >> already a lot of them. we're all following in her footsteps but it's big and popular. >> subscription is a great business because if you can get the credit card once you hope that they won't -- >> it is a great business but i think in both of our cases it

isn't why we started our business. it was a fit for the consumer problem. it's hard to discover beauty products. it's particularly hard to purchase beauty online for the first time. consumers want to touch it and try it and that's the category. when we thought how do we overcome that, build an online company where you want to buy new products for the first time, that's how we developed the idea of having a subscription. >> explain how it works because the business model is interesting. there's also -- >> we are between the consumers and brands. they sign up, they tell us about themselves. they tem us their preferences, the way they shop for beauty. and then we tailor a personalized subscription for them. it's $10 a month for women. $20 for men. inside you get products to try

but the purpose is for you then to find products you love and purchase them with confidence. that's the whole idea. we're now opening stores. it's really about getting customers to almost, like, consider a whole new set. love for the beauty industry and birch box gives her confidence and makes her want to engage in a new way. >> i love that. it makes sense people don't know if they want to spend a lot of money or a little something. however, you are now talking about major retailers getting into the same spot like a sephora who may be doing something like this. i don't know how you keep out others from competing like that.

>> we have hundreds of thousands of dogs and what they like, what their preferences are. >> it's being there first. >> it's really understanding what they want, delivering the convenience, the value to them and then continuing over and over. we have dogs with us for almost four years now. we know they're largely living in an urban environment. we talk about bark science of different types of squeaks, fabric that the dogs really respond to. >> i think the boom was years ago. you saw so many people go after this business because that annuity payment was so attractive. really you see that you can't last if you aren't delivering value to consumers and brand. it's getting interesting. >> are both your businesses profitable? >> we don't have to disclose that. we're private. >> you don't have to. but i'm asking. >> we're cash flow positive. >> it's a decision on where you

invest, right? >> so the birch box for the guy is $20 a month? why is it double what it is for a woman? >> there's different value. there are fewer grooming items so we'll send you tech accessories, chargers, new boxers, headphones. so it isn't just the grooming products. it's a way to discover lifestyle moments. >> how much value would you say is in the box? >> it varies every month. ed $50 to $100 is regular. >> you don't have a choice what comes in the box? whatever is in it is in it? >> when we started it was all about surprise and delight and that really helped consumers kind of suspend their whole preconceptions of what they wanted. today we have a way for you to have more hand in this process of choosing. we allow you to choose a product in your box and sometimes you can choose the whole box in and of itself if you're looking for

a new shave product or you know you love nicole richie and you want her. >> we have to run but quickly, if it's $100 worth of stuff, are you losing money or is it subsidized by the companies? >> it's really strong. it's more the value. >> okay. guys, thank you both for coming in. we do have a busy hour still to come. key economic data including weekly jobless claims and import prices. plus gop presidential candidate lindsey graham will join us. stick around. a new sea chance to tryew look. something different. this summer, challenge your preconceptions and experience a cadillac for yourself. ♪

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third time's the charm. a third straight day of china devaluing the yuan. more on the move, plus, breaking news on retail sales. that's all straight ahead. we will hear from market pros on how you should play this volatile market. connecting with senator lindsey graham. the presidential hopeful joins us to talk iran, immigration, and the economy. his plan to win the white house is just minutes away. and the scramble to find eggs with prices on the rise, importing the incredible edible may be an excellent idea as the final hour of "squawk box" begins right now.

live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box." first in business worldwide. i'm becky quick. we are less than 90 minutes away from the opening bell on wall street. we have been watching the futures and they've been in positive territory. the dow futures up 33 points. the nasdaq is indicated to open up by about 23 points. let's take a look at the markets in europe this hour. you can see that the dax is up rebounding a little, up 1.7%. the cac in france is up and in it laly the market up about 2%. china central bank holding a news conference overnight arguing there is no basis for continued currency depreciation. the pbo set the midpoint range

at yesterday's close. lawmakers are discussing some terms of greece's bailout before the meeting tomorrow. and then back here in the u.s. a busy day on the data front. we'll get weekly jobless claims, july retail sales and import/export prices. and we have a developing story from china. a huge explosion shaking a port city killing at least 44 people and injuring hundreds. the blast sent massive fireballs into the night sky. the initial blast erupted at a warehouse for hazardous material that triggered other explosions as well. the cause is not immediately clear. this morning hyundai officials say about 4,000 vehicles that were imported to the country were destroyed by the blast. a few stocks on move this morning, retailers kors missed estimates on the top and bottom lines blaming at least part of that miss on a delay by a number of states. some states that usually hold those events in july actually pushed them off to august.

you can see by the chart it's been a rough ride since the spring for shares of -- actually we're talking kohl's. i think i said kors. kohl's is down -- did i say kors? i did. we're talking kohl's. kors has had a tough ride, too, in case you're scoring at home. cisco systems beat street forecasts for both profit and revenue. cisco did particularly well in the u.s. market which helped make up for weakness elsewhere. microsoft shares trading higher this morning upgrating the stock to buy. 1% premarket and shake shack under pressure. the hamburger chain's 4 million share offering priced at $60 a share well below the closing price yesterday. talk about a roller coaster ride, a huge swing in the dow. blue chips down nearly 300 points at the lows of the day bounced back to close basically flat. joining us now is a fix ed incoe

strategist and the director of global macro for fidelity investments and global assess allocation division. good morning to both of you gentlemen. yuri, i'll start with you. i just want to go to the question about the fed and we'll get to china in a second. i think it matters, are you still a september man, and how is that impacting your thoughts about where things are heading this summer? >> yeah, well, that's the big question, of course. will this latest deflationary way from abroad sway the fed to wait another quarter to begin liftoff? and i think it may well do exactly that. we've heard more from members about a september liftoff but it's certainly a 2015 start to this rate normalization cycle. i think falling well below 2% and credit spreads widening and commodities down and the devaluation in china, it may very well be enough to sway them

unless things sort of come back together fairly quickly in the coming weeks because we do still have a month. >> you're a wonderful guy, but what do you make of what jurrien just said? >> it's a coin flip in september. we're looking for not a full 25-point basis hike by but a micro hike. nowhere is it written in this new environment they have to move by 25-point basis increments. the bank of japan when they hit zero or near zero and their liftoff was much slower and 10 to 15 point range. you could certainly see that from the fed and that would meet market expectations throughout the rest of the year. instead of one hike we see 10 to 15. >> between now and then the markets set themselves up how?

>> well, in terms of the bond market, we have it priced in and, frankly, the only thing we don't have priced in is the fed's stopping rate. in 2018 the markets are currently pricing at stopping rate of roughly 2% or so. i think that number comes down another ten basis points give or take and that's far more important for bondholders out there which just matters to a ha handful. >> on equities, what do you think, jurrien? >> the market has been flat basically all year. i think the s&p is up 1% or so. so we've been in this holding pattern, this sideways pattern for months and months and months. waiting for the earnings estimates to come back up after that hit from energy and the stronger dollar. and so far there's little evidence we're going to come out that have range, but there's not a lot of evidence we're going to break down from that range. we're in one of those years which is not uncommon when the fed is starting a rate cycle.

>> does the market move up or down on that news? >> if the fed doesn't move in september, the dollar maybe goes down a bit and the market goes up a bit. but then all eyes will be on december fairly quickly and i think really the key is which way is the fed going to go? are they going to go early and shallow or late and steep? and i think i agree with guy, even if they go in september, as long as they carefully tell the market, it doesn't mean they're going to go 25 at each meeting, which i think they've already said that. i think the markets will be okay. going from zero to a quarter or even an eighth or an eighth to a quarter in the grand scheme of things isn't really that important. but clearly the markets are kind of pricing in the possibility of a policy error with the front end coming up and the back end of the curve coming down.

the fed will look at that. >> how important is it on the two-year? we're not that far away. >> we're not that far away. we don't quite get there. it's psychologically significant, but really the level i'm looking at, not to revert to your earlier question, is on a 2018 euro dollar market. this is a way that institutional investors can trade and make bets on the point in time level of the fed funds rate. and that number is as close as it's going to get according to janet yellen. that puts in an economic or fundamental floor on how low ten-year rates will go. a large portion is based on the fed's future trajectory and stopping rate. in the short term we could get more risk aversion type buying we saw on the events but i think for the most part it's played out so we probably don't hit the 2% level.

>> given that the markets in the u.s. in terms of the equity market have been flat, where do you put your money otherwise? >> if you look around the world, you want to go where the reflation is taking place. europe survived yet another greek crisis over there. i like europe. the ecb is doi massive quantitative easing. a country like germany trading at 13.9 versus u.s. of almost 17. and it's in the same sort of mid cycle expansion phase as the u.s. is but with a central bank that's easing further rather than looking to tighten. i still like europe a lot now that greece has faded back to the background where i think it will be for a while. japan has been interesting with, again, full-on reflation. the japanese market is strong this year. maybe tactically that's not a

place to put money now. certainly europe is good. emerging markets with this china news i still think has some problems. >> gentlemen, thank you so much this morning. really appreciate your perspective. >> thank you. okay, coming up, the cfo of medical imaging systems and surgical products joins us. we'll hear about the company's turnaround and its latest products to help women in the fight against cancer. and then, it's been more than half a century since an american flag flew in cuba. the embassy row opens tomorrow. michelle caruso cabrera is there. she's been playing with a smartphone as well in a place that barely has any internet.

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welcome back to "squawk box." got the dow opening up higher, about 40 points higher. the nasdaq looking to open up higher as well, about 20 points higher. headlines this morning just coming across the tape. coke naming james quincy as its new president and chief operating officer, will have responsibility for all the operating units worldwide. we will be reporting directly to the ceo.

he previously had run the group in europe and of course there's now speculation when you think about succession about whether he would be the next man in place after if there was a transition. there's no news that there will be. okay, coming up, what's it like owning a smartphone in cuba? we put cuban technology to the test after the break. and then our newsmaker of the morning, our producers had a tough time getting in touch with lindsey graham. we're not sure why but he's finally made it to the show. presidential politics in a bit. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about.

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so what's it like using a smartphone in cuba? what's on it and does it even work? michelle caruso cabrera joins us this morning. she's in havana. she has more on that story. good morning, michelle. >> reporter: hi there, andrew. we have one of the more common ones used here in cuba, a galaxy samsung s4. you can see the orange packaging here. i'll take it out. typical smartphone. smartphone in cuba and yet there's very little internet here. why on earth would you have a

smartphone? when you purchase this, which costs about $360, it comes preloaded with apps. already has wikipedia fully loaded. you don't have to get on the internet. you can just search everything there. it gets out of date sometimes so you need to get it updated. maps come preloaded. the entire world on your phone so you can do map searches, et cetera, without having to access the internet. when it comes to smart phones we can tell samsung and android far more popular, more pervasive on the street. the reason is, one, they're cheaper. two, pcs are far more common here than macs from apple. it's easier, your system is easy to connect to. the difference in price, this is $360. if you wanted an iphone almost $900. but we see a lot of other apps for communicating.

as the wi-fi becomes a little more available, more and more people using what's up, et cetera, to communicate. >> okay. michelle caruso cabrera, i thought maybe there was a toss to a piece or something. i apologize. it's great to see you. i should tell you, michelle, when i was in cuba a couple years ago the only people who had cell phones were doctors, and doctors would take them or sell them or rent to other people who wanted to be able to get on the internet. this was five or six years ago. >> reporter: it's become far more -- the place looks so different to you now. if you're a first-time visitor you would come here and say, wow, the place is really antiquated. you would come here and say there's been so much progress. many more people with smart phones. they're using the android version of like a skype or a face time and they're talking to family members overseas.

and they are so excited about it. it was only available as of last month, the wi-fi hot spots, and they're thrilled to do it. >> michelle caruso cabrera in havana, thanks so much this morning. medical diagnostics company gaining momentum with new products to detect early stages of cervical cancer and advancements in mammogram technology. joining us is bob mcmahon, the cfo, and, bob, thousand fank yo being here today. >> thank you for having me. i appreciate it. >> we've talked about advancements in the past. the mammography is driving the bulk of your growth, is that correct? >> yes. we just reported third-quarter results two weeks ago. the thing we're really pleased about we had top line growth of about 12% on a basis, net income growth of 24%. i think the thing that's really exciting 18 months ago this was a business that was in decline.

to your point around steve, he came in about december of 2013, brought in a brand-new leadership team, and we've really been making great progress of really growing the business kind of on a steady basis. as you mentioned the last quarter it was a breast health business between the 3d mammography systems. >> you look at the stock and it has certainly been on a tear attracting all kinds of businesses including carl icahn. he still owns like 9.9% in the company. but when people see things like that happening, they wonder if the bulk of the stock gains are in the rear-view mirror. >> i think the exciting thing about the business, we have multiple growth opportunities under way. the genius 3d mammography is still only 20% penetrated into the market. we still have 80% of that market to convert over and that's a

multibillion dollar opportunity. i think the other thing is we have a very untapped, under developed international business and we think that has growth opportunities for multiple years. we're only about 25% of the business today outside the u.s. and we really think when we look at some of our peers and the markets, over time there's really no reason that shouldn't be close to 50%. we think there's a lot of growth ahead of us. >> what are the hurdles to getting into international markets and what have the hurdles about having penetration here in the united states? >> you know, we have market leading products and it's something that the team is just now start iing to scratch the surface. we have dedicated teams. we've put a brand-new leader in place and he's building out his team and i think it's really just focusing on a number of markets both developed as well as emerging markets really taking the technologies that we have here in the u.s. and bringing them to the international business. one of the areas that hadn't been focused on.

>> it sounds like a great pr prospect. what have the hurdles been? >> i think the hurdles are really just establishing some of the infrastructure. we have a dealer network outside the u.s. making sure we have the right dealers in place focusing resources in the countries we're looking at and really driving that business. i think historically we've really focused on the u.s. markets and i think really having the ability to have both 2d as well as 3d mammography systems will allow us to play on all sides of the market from a price point perspective. >> bob, maybe you can help me out. i was confused. i looked at information that showed analysts overall, a lot of them raised their price target and rating on the stock after the last earnings. it looks like on whole about the 18 analysts who cover the company have a buy rating on the stock, but it looked like the average stock price that they have, the price target over the next 12 months is something like $40.25. you're trading well beyond that. how do you add up or square those two numbers?

>> i'm not going to try to get into what the analyst projections are. what i can tell you we're really excited about the business and i think what we've seen over the last several quarters is an acceleration of growth. i think we will continue to see very positive growth in our business both on the top line and the bottom line. i think the other thing we've been doing is not just performing better in a commercial standpoint, we've been driving operational improvements so our cash flow is up almost 47% year on year and so i think -- i don't know where the analysts are projecting but i know we're confident about our future. >> bob, thank you for joining us today. >> thank you for having me. apple looking to push the ipad into the business world. "the wall street journal" reports the company is working with more than 40 tech companies to make it a more appealing for work. apple tries to deal with falling

ipad sales. coming up, key economic data that the markets will be closely watching today. retail sales and import prices and jobless claims after the break. and then presidential candidate and south carolina senator lindsey graham is our special guest. we head to a break. take a look at u.s. equity futures. hello. i am here to offer sophisticated investing strategies. my technology can help you choose the right portfolio. monitor it. and automatically rebalance it. all without charging advisory fees, account service fees or commissions. that may be hard to compute. but i'm a computer. so trust me. it computes. say hello at intelligent.schwab.com

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♪ ♪ i'm in a new york state of mind ♪ welcome back to "squawk box." among the stories front and center, tesla's share offering is set to price after the market closed today. elan musk plans to buy up to $20 million worth of the electric carmaker. they're trying to raise more cash to offset heavy spending on increased production. and merck upgraded to outperform. the firm citing increased optimism about merck's product pipeline. and then watch shares of go pro. coverage of the camera maker's shares with an outperform

rating. the analyst pointing to an expanding product line and new software which will increase ease of use. and then take a look at roche, buying up to $24 million. the move should help the swiss drug company expand products for fighting so-called super bugs. and newscorp posting better than expected earnings. cost cuts in the news and information services including the dow jokes and "the wall street journal." the company announcing its reviewing options for amplify its digital education brand. we've had them on the network several times. joel was on -- i don't know if he was on the board but he worked for murdoch for quite some time and handled the scandal that took place in the uk. there you have it. we're also talking about coca-cola this morning. the beverage giant naming james quincy as its new president and

chief operating officer. will report directly to the ceo. we are a few second away from retail sales, import prices and the jobless claims numbers. they're numbers the street is anticipating and watching for especially the jobless ones. rick santelli is standing by at the cme in chicago. rick? >> reporter: thanks, becky. and here they are. up 0.6 as expected on headline. retail sales, no revision to june. through the internals, strip out autos, it's up 0.4. these are like spot on with anticipation. strip out auto and gas, you're also up 0.4. control number 0.3. that's light. there are revisions to july outside of the headline number and all of them are better. down 0.2 autos and gas. so this is all pretty good news all things considered. the control number last time down 0.1. moves to positive 0.2.

they're on the light side. import price for july, down 0.9% month over month. actually that's better than anticipated. a smaller price increase. we're expecting a number closer to 1.2, 1.3 on a year over year basis. these are minus numbers. and 10.4 is light. we're looking for something closer to 11. jobless claims, 270,000. survey says 274,000 up 5,000 because last week's 270 stands slightly corrected at 26 9. claims moved up to 2.7 million. let's summarize we had a 30-year bond we're paying very close attention to that's been above its 275 closing yield. it's basically about the same level. i marked it 2.82, 2.83. higher from the context of

retail sales delivering, it did deliver. is it enough horsepower? remember, it's a july number so it's not necessarily going to impact what we are seeing in all the other numbers. there's mmm more to come. i know everybody is going to pay attention to how atlanta fed gdp gets updated. it builds as all the pieces get put together. 30-year bond at 1:00 eastern, yesterday's ten-year note auction was a bit of a dog. everyone is watching china and maybe more important all the hands on all the levers trying to figure out exactly what to do with their currency market. back to you. >> all right, rick. thanks so much. for more on the numbers the chief economist and senior investment officer at oppenheimer funds. welcome. >> good to be here. >> what's your reaction? pretty much in line, maybe a few revisions, pretty good. >> it's a good number. if there was another disappointment like last month we would have been concerned. this is a ho hum number but it suggests this steady grind

stronger u.s. economy is still in place. this is the most important component of it so it's okay. nothing terribly exciting but okay. >> we've been looking for a pickup in retail and maybe the read through of the unemployment report where hiring was actually pretty good in the retail sector was a tell that the number would be at least okay. >> i think that's a good point. we saw some of the preliminary gdp numbers being okay. e interesting thing will be to watch the savings rate and see if particularly when we get to back-to-school sales this month where there are incentives, sales tax holidays and so forth, if people dip a little bit into the savings they've been building, people are getting jobs. the job market is okay. like everything else, okay. we'll see where that goes. this keeps us on track for what we would have expected coming. i don't think anything is different than 15 minutes ago. >> so things are, as we say, okay, but there are concerns about the ripple effects of

what's taking place in china and what ultimately it could mean to the global economy here in the u.s. how is that all factoring into the way you're thinking and a rate move in september? >> what china is trying to do is avoid some kind of tightening, and they're in a kind of tough situation because the devaluation encourages capital outflow that is produce as tightening for them. it goes in the opposite direction what they've been trying to do with interest rate cuts. so they're trying to figure out how to run a 21st century economy. i think that 5% devaluation that might back up has minimal impact in the u.s. people are trying to -- because a computer is 5% last summer, that will go in the company's margins. i don't think this is a big move for us. the problem is the u.s. -- what i was concerned about with today's number the u.s. consumer is probably the only moderately

strong part of the whole world economy. maybe singapore. it's hard to find any place else. this is about it. >> it's not going to push the fed back, china? >> i don't think unless there had been some tumbling down and some major financial issue, i don't see why the fed says, okay, this is part of the world economy. we have to look at what's going on in the u.s. it's time to make this change. >> thanks for swinging in. >> glad to do it. always glad to be here. >> oppenheimer fund chief economist. when we come back, we'll take a check on the markets after the big economic nuls. plus, senator lindsey graham on the run for the white house. and then what are you willing to pay for a dozen eggs? the numbers may fry your brain. stick around. "squawk box" will be right back.

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welcome back to "squawk box." scott wapner is outside. his car may be getting ticketed, if you can believe that. >> or towed. >> he's standing there with the fine folks of the nypd. we will give you an update on scott's potential ticketing situation in a moment. we hope that doesn't happen. a packed republican field.

joining us to tell us why he should be the next president of the united states is gop candidate and south carolina senator lindsey graham. we appreciate you being with us. thank you. i know there were ear piece issues. we promoted earlier in the hour the issue of iran. it's a topic we've been talking about a lot. i want to get your thoughts on what is about to happen. >> if we can get the senators to disapprove the deal that would give the next president leverage. it's not between this bad deal and a better deal and i think almost anybody could get a better deal. >> senator, that is the issue. sandy berger said it's not between a bad deal today and a better deal later.

it's between a deal today and nothing later, that there is no second option. >> that's garbage. that's complete garbage. the iranians know they would lose a war with us. >> but you have to be proepd to go to war if that's the case, sir. >> absolutely. if they try to break out and we don't go to war, we're idiots. if you want a program for peaceful purposes, you can have it. you're not going to get a dime of money and buy new weapons until you stop destabilizing the world and supporting terrorism. we're about to empower a radical ayatollah with a path to a nuclear weapon, a missile to deliver it and money to pay for it. >> what about allies across the globe who have agreed to the deal already and what does it say about our standing with them if we get into a situation where the president agrees to a deal and then we back out of it? >> i think this is a terrible deal. because the world comes together

doesn't mean it's a good deal. look at munich. if we could tell the french and germans and anyone else if you do business in iran you're not going to have access to american banking, that would matter. congressional sanctions gives the next president leverage to a better deal. >> can we talk about the broader campaign at this point, just to get the leverage, it is a crowded field at this point. you just missed making the big stage at the recent debates. you were there neck and neck. you said you think hillary clinton would beat donald trump like a drum in a general election. it has to be frustrating to you. why do you think he's getting the numbers in the polls? >> i think a lot of people are frustrated. he's expressing frustration with washington. i'm frustrated we can't solve any problems. that's what's broken about

washington, we can't work together. i think he's tapped into frustration but his policy solutions are gibberish to me. that's not an immigration solution, that's just gibberish. >> senator, donald trump's presidential candidacy has been described as a sideshow and yet as a main show. what is the tipping point? >> when the republican party thinks about winning in 2016. we have problems with hispanics and women. demagoguery is taking hold on immigration. everything is a.m. nexty. saying illegal immigrants are racists. i'm pro life. it will be tough if we don't have an exception for rape or

incest. i hope the desire to win will take over the desire for anger. >> the other thing is the economy and how you're planning to approach it differently than others. you talked about flat taxes. do you think right now that raising -- they're in the headlines every day that a flat tax will not be considered regressive? >> i want to do something like simpson bowles. the economy will crash in about 20 to 30 years because 80 million baby boomers will go into retirement. we have to flatten out the tax code. take some of the money to pay down debt. people have to work longer. means test benefit for people of my income or we become greece. the sole purpose of my presidency when it comes to the economy is to get us off track from becoming greece, take

something like simpson bowles and get a bipartisan position. i love chris christie. he's a good guy. when he signed the grover norquist tax pledge, that means eliminated deduction in the tax code, you have to put all the money to lowering tax rates. no money goes to lowering the debt. you'll never get a democrat to means test benefits or age adjust under that formula. >> the other issue i wanted to get to you on which really does have to do with the campaign is campaign finance reform that you have talked a lot about but is an issue we all agree or think should happen and yet nobody really wants to do it. how would you do it? >> you have a constitutional problem after the citizens united case. unlimited money from unknown donors is a problem over time. i don't know how you can fix the system unless you address the citizens united case. transparency is probably the best way to do it. >> some democrats would make the argument, by the way, that case

helps republicans not democrats. do you buy that? >> no, i don't think it helps america. there are about 50 people funding all of these campaigns. super pacs will dominate campaigns. we're heading for some corruption here pretty soon. at the end of the day campaign finance reform is very important but nobody is talking about isil. nobody has got a coherent solution to keep radical islam from coming here. and this whole debate has been lackluster in terms of substance. they're coming to hit us here. we need boots on the ground in iraq and eventually syria to keep isil from attacking our homeland, and we're not really talking about that kind of issue. >> how much do you think that issue resonates with the american public versus immigration or some of the women's issues and pro-life or not issues? >> that's a good question. >> other domestic finance issues. >> that's a good question. i think it's right under the surface. i'm talking to you from new york. people in new york are --

anytime something happens in new york, you wonder if it's terrorism. i can promise you that radical islam is thriving and surviving in iraq and syria. they want to hit us here. they're having the capability to hit us here. if we don't send some of our soldiers back over there, we don't have enough in iraq and have to go into syria with a regional army. if we don't pull the caliphate up in syria, they will attack us here. i think most americans are very worried about another 9/11, and one is on the way if we don't up our game and go on the offense over there. senator, you said you obviously have taken some shots at donald trump and don't appreciate who he is, but you also said you didn't like the debate the other night, the way they went about it. why is that? >> well, you know, it's good to challenge a candidate, but no one has talked about would you do revenue as a republican to get democrats to reform entitlements? that's a big issue. you know what drives the

long-term debt. >> do you mean would you raise taxes in order to cut spending? >> well, it's not raising taxes. it's eliminating a deduction. nobody is talking about raising tax rates, but we are talking about eliminating deductions and applying some of the money to the debt. that violates the grover norquist pledge i like a lot. i'd be willing to do that if democrats would age adjust and means test. nobody has talked about the big things like that. do you need boots on the ground in iraq and syria? i think you do. no one's talked about how to destroy isil on the republican side much different than obama. it's not just enough to criticize president obama. what would you do to stop isil? how would you degrade and destroy it? i didn't get a whole lot out of that debate. >> senator, we're going to leave the conversation there. we appreciate your time this morning. >> thank you. >> a great conversation to have. we hope you come on back. >> absolutely. >> talk to you soon. thank you. scott, an update? right before the senator came on

i was turned this way. eric now i see a lovely member of the nypd. >> your car is gone. >> i'm going to give a shout out to the nypd for cutting me a break. no ticket. they were literally about to tow the car. the car has been moved. the car has been moved. i'm thankful that i happened to look over my own shoulder and what was one nypd officer was quickly two and then three. the radios were out. so i was out and, thank god no ticket, no tow. >> new york's finest cutting you slack. you got lucky. >> big shout out for the men in blue this morning. and the men and women in blue. when kwe come back, news frm twitter. jim cramer joins us from the new york stock exchange with a look at what investors need to watch at the open of trading today on wall street. lily, may i call yo? i don't really know what else you'd ca- lily, i want an iphone, with a great data plan to share pictures of this smile. well, all of our mobile share value plans come with rollover data

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characters. there will be a character limit on direct messages. everyone is focused on what the future will be and who the ceo will be. you are looking at 29.57 on that stock. >> stocks on the move. microsoft trading higher. upgrading the rating to a buy. kra hoo getting a boost. bernstein is raising its rating of the stock to outperform from market perform. shake shack is under some pressure. $60 per share, well below their closing price of one day ago. jim cramer joins us. i have seen your tweets about my lack of being towed. >> this is a great thing. do you know how badly this day would have been had you been towed? the halftime report might have been a quarter time report.

>> my own mood would have been changed. >> being towed, people in new york know that being towed is literally the end of the day. >> no doubt about that. speaking of changed moods, jim, what happened yesterday, what does it mean for how we go forward here? we should have never been down. the dollar held, oil held, interest rates are steady. very important. the dollar is strong. interest rates, bla. this is some market, scott. honestly, we came in yesterday with all real good setup. we come in today with a terrible setup. the market looks up. i don't know how long that can last. >> what do you make of some of the moves this morning? i know you had the cisco's new

ceo. >> trump definitely delivered. he came in with an attitude that said, i am taking no prisoners. he hit the ground running. he was talking about buying stocks in the cybersecurity space. the most important thing is, he gave guidance in the press release. we didn't sit there and try to find out whether to own cisco or not. you bought it when the release came out. nice change of page. >> you got yahoo! and microsoft upgrades. yahoo! needed one. >> the yahoo! upgrade is grade. they were suffering under the ali baba thing. >> it presumes they can't sell it with a good tax base. microsoft is about consumer products. they talk a lot about clouds. you know 53 million people play grand theft auto?

you were almost involved in that situation. that would have been grand theft auto of the worst sort. they take you to brooklyn navy yard. thank goodness for the windows here. that's all i can say. >> he ran out and begged not to get towed and had somebody drive the car away. pretty fun to watch. >> we'll see you in about 5. have a great one. >> up next, the bird flu leaving egg farmers scrambling. some analysts see prices hit $6, a dozen this winter. could imports keep egg lovers happy. morgan brennan is on the egg beat. we will hear from her next.

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the bird flu is far from over. egg crisis since april. the threat to poultry flocks in the midwest remains high. morgan brennan joins us from des moines iowa at the site of the iowa state fair. >> reporter: good morning, andrew. two months since the last case of reported bird flu. 142%, that's how much the wholesale price of a dozen midwest large eggs has risen since the beginning of april when the peek took effect. they are expected to stay

elevated until 2016. it takes 12-18 months for production levels to get back to normal. we have some producers that will begin restocking their farm soon, including center fresh group that lost 8 million hens to the outbreak. that farm or that company expects to begin bringing birds back as soon as next month. there is a huge wild card to all of this. that is the return of bird flu that fall when migratory waterfowl begin flying south. the industry is aggressively preparing for this. if this were to wipe out more flocks, with he could see egg prices hit as high as $6 a dozen. it is not just eggs. tucky pric tucky turkey prices have been climbing. you are seeing a shortage of turkey deli meat. the pain is very real for

consumers and farmers. the hope is the next round of bird flu can be swarted athwart >> thank you very much. i hope you get some eggs out there. >> egg on a stick. thank you for being here. we are glad your vehicle is safe and sound. make sure you join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. the bulls trying to follow through on yesterday's upside reversal. we are coming off the highs in the morning. china intervening for a third day saying there is no basis for a further devaluation. retail sales for july in line, .6 higher for june and